The Assn. of Certified Fraud Examiners (ACFE) finds businesses worldwide lose 5% of revenues to internal theft. Here's what you can do about it.

Organizations around the world lose an estimated 5% of their annual revenues to occupational fraud--more than $3.5 trillion in U.S. dollars, according to a survey of Certified Fraud Examiners (CFEs).

The 2014 Report to the Nations on Occupational Fraud & Abuse includes data compiled from 1,483 cases of fraud submitted by CFEs globally.

Based on the findings, ACFE presents five of the top lessons business owners, directors and managers should heed to be better protected from the risk of fraud:

Implement a fraud hotline. Occupational fraud is more likely to be detected by a tip than by any other method. More than 40% of all cases were detected by a tip, with most coming from employees of the victim organization. Hotline service providers can help implement an anonymous tip reporting system for businesses of all sizes and industries.

Be aware of red-flag behaviors. More than 90% of fraud perpetrators displayed common behavioral indicators, such as living beyond one’s means (43.8%), having financial difficulties (33%), maintaining an unusually close association with a vendor or customer (21.8%), and exhibiting control issues with an unwillingness to share duties (21.1%).

Don’t depend solely on external audits. Many organizations use external audits, but they are among the least effective controls in combating occupational fraud. Such audits were the primary detection method in only 3% of the fraud cases in the study, while 7% were detected by accident. Businesses need a robust anti-fraud program with a reporting system for tips for better protection.

Small businesses should be especially vigilant. The smallest organizations in the study were especially hard hit, with a median loss of $154,000--higher than the overall median loss of $145,000 for fraud cases in the study. Small organizations typically use fewer anti-fraud controls than their larger counterparts, which increases their vulnerability to fraud.

Focus on prevention, not recovery. The process of recovering the losses from a fraud can go on for years. At the time of the survey, however, 58% of respondents noted that there had been “no recovery” of losses to date. By contrast, only 14% of victim organizations had made a full recovery during the same period. It is clearly more cost-effective to prevent fraud with proactive controls instead of hoping to recover losses after the fact.

The pilot of a hot-air balloon that crashed last summer in Texas, killing himself and 15 sight-seeing passengers, had taken a cocktail of prohibited drugs before liftoff including the opiate pain-killer oxycodone.